Tesco: Supermarket giant widens market share amid price war
Supermarket juggernaut Tesco delivered an upbeat trading statement for the first three months of the year as the price war in the competitive UK grocery market rumbled on.
Food sales at the grocer were up 5.9 per cent year-on-year led by a strong performance in fresh food. Meanwhile, non-food sales climbed 6.2 per cent after a surge in home and clothing.
The firm ramped up its online market share by 163 basis points after a 11.5 per cent jump in sales. This came alongside the launch of Tesco’s F&F clothing line in May.
Tesco scaled up its share of the wider grocery market by 44 basis points year on year to 28 per cent after 24 consecutive four-week periods of share gains.
Booker – Tesco’s food wholesaler and catering distributor – recorded core catering growth of 7.3 per cent, which it said was supported by warmer weather and a “strong Easter”. Core retail growth increased 5.4 per cent on the back of “strong symbol brands performance”.
The grocer is eying operating profit between £2.7bn to £3bn for the full-year – which leaves guidance unchanged from previous estimates.
Free cash flow – which shows how much cash the company has available to reinvest in the business, pay down debt and distribute to shareholders – is expected to be within the £1.4bn to £1.8bn range.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Tesco continues to flex its muscles as the nation’s favourite grocer, delivering market share gains and increased customer satisfaction in an extremely competitive market.”
Chiekrie added: “Despite the strong start to the year, full-year underlying operating profit guidance has been maintained at a range of £2.7-3.0bn. That points to a slight decline from the £3.1bn seen last year and looks a little conservative in the current environment, potentially leaving room for some positive surprises as the year progresses.”
Tesco kicked off a £1.45bn share buyback programme on April 10 2025. The retail giant said it had bought back £448m worth of ordinary shares up until market close on 11 June and expects to complete the purchases by April 2026.
Trolley wars ramp up
Grocers across the UK have felt the crunch of a brewing price war.
Asda, which has seen its market share reduce over the past year, made waves after new chair Allan Leighton talked of a “war chest” to turn around the struggling grocer.
Tesco has said it expects profits to be down as much as £400m in the coming year as a result of the market conditions.
In the firm’s first-quarter update, the grocer said it had price matched over 600 items to discount supermarket chain Aldi and launched around 9,000 Clubcard prices weekly.
Ken Murphy, Tesco’s chief executive, said: “The market remains intensely competitive, and we are committed to ensuring customers get the best value in the market by shopping at Tesco.”
Murphy said: “In the UK we have continued to see market share gains and increased customer satisfaction across a wide range of measures, a reflection of our powerful value proposition, strong availability and focus on product quality and innovation.”
Tesco’s sales also received a bump across central Europe. Like-for-like growth was up 4.4 per cent after a 7.3 per cent jump in fresh food sales.